This week a unanimous jury in Judge Albright's W.D.Tex. courtroom filled out a very simple verdict form that favored the patentee Lashify over the accused infringer Worldbeauty, who sells drugstore lashes:
Q: Did Lashify prove, by a preponderance of the evidence, that Worldbeauty has directly infringed the asserted claims of the asserted patents?
A: Yes, Yes, Yes (all 3 claims).
Q: Did Lashify prove, by a preponderance of the evidence, that Worldbeauty's infringement was willful?
A: Yes
Q: Did Worldbeauty prove, by clear and convincing evidence that the asserted claims are invalid as obvious in light of the prior art?
A: No, No, No.
Q: What amount did Lashify prove, by a preponderance of the evidence, it is entitled to as damages for Worldbeauty's infringement?
A: $30.5 million in lost profits.
There will certainly be some post-verdict motions, including the adjudged infringer's motion for JMOL as well as the patentee's request for treble damages and attorney fees. The $90 million potential is certainly enough to blink your eyes at.
This is my third post focusing on Google's en banc challenge to 'loose' damages testimony. The patentee, EcoFactor, has now filed a responsive brief in the ongoing smart thermostat patent dispute which resulted in a $20 million jury verdict against Google. A 2-1 Federal Circuit panel affirmed the verdict and, as you might expect, EcoFactor's en banc response defends the decision, arguing that the case presents a straightforward application of established precedent. At core, EcoFactor argues that Google and amici are seeking to impose new, rigid rules that go beyond existing Federal Circuit precedent. Although some say that hindsight is 20/20, anyone who has undergone a hypothetical damages analysis will understand that the process always involves some degree of guestimation and uncertainty -- adding additional precision and calculation is unlikely to provide any true certainty or predictability.
Google's pending en banc petition in EcoFactor v. Google has drawn significant support from some tech giants, focusing on the application of Daubert standards to patent damages expert testimony. Five amicus briefs supporting Google's position have been filed with the Federal Circuit, each arguing for stricter scrutiny of damages calculations and expert reliability in patent cases. This post discusses the case and the issues presented by the amici army.
Google recently petitioned for en banc review a Federal Circuit split decision in EcoFactor v. Google. The case focuses on when a damages expert testimony satisfies Daubert. The original opinion also highlights an interesting debate regarding the appeal of pre-trial eligibility rulings.
The U.S. Supreme Court has granted certiorari in Dewberry Group, Inc. v. Dewberry Engineers Inc., a trademark damages case focused on how corporate separateness principles apply to disgorgement remedies under the Lanham Act, 15 U.S.C. § 1117(a). The Fourth Circuit's decision affirmed a $43 million disgorgement award against petitioner Dewberry Group (DG) for trademark infringement, an amount that included profits earned by DG's "legally separate" corporate affiliates. Apparently, the affiliates were “single-purpose entities,” also privately owned by John Dewberry, whose sole function was to own commercial properties serviced by DG.
Pierce the Veil: In its literal sense, a veil is a delicate fabric that separates the visible from the concealed, a barrier that can be easily lifted or parted. However, the phrase has a history of extending beyond the material world, with a veil often serving as a boundary between the physical and spiritual realms in our universe. Many of us go through life, only occasionally glimpsing beyond this veil into the hidden spiritual dimensions that, according to story tellers, lie alongside our own. In the corporate world, the veil of corporate personhood serves to shield the owners from personal liability, creating a legal fiction that separates the actions of the company from those of its shareholders. This veil of protection is not impenetrable, however, and can be pierced by the courts in cases of serious misconduct or wrongdoing, exposing the owners to personal responsibility. Although the truth of owner identity may already be known, piercing the corporate veil removes the protection against responsibility by attempting to holding accountable those who would misuse its protections. But, the legal doctrine of corporate separateness is quite strong and I might venture that it is easier to pierce the veil of our spiritual realms than the corporate analogue.
The Federal Circuit recently decided the en banc design patent case of LKQ v. GM, but the court has not issued an en banc decision in a utility patent case since 2018. There are currently four interesting petitions pending before the court.
On May 9, 2024, the Supreme Court issued its opinion in Warner Chappell Music v. Nealy, No. 22-1078, 601 U.S. ___ (2024), resolving a circuit split over the availability of back-damages in copyright infringement cases. In a 6-3 decision authored by Justice Kagan, the Court affirmed the Eleventh Circuit's ruling, permitting recovery of damages for acts that occurred more than three years before the filing of the lawsuit under the "discovery accrual rule."
For those of you who have not been following the case, the Plaintiff Sherman Nealy, a music producer, helped create musical works in the 1980s with his collaborator, Tony Butler. Nealy was incarcerated from 1989 to 2008 and again from 2012 to 2015
I was rereading the Supreme Court's recent enablement decision of Amgen Inc. v. Sanofi, 598 U.S. 594 (2023) and was struck by the Supreme Court's statement that its 19th Century decision of Wood v. Underhill, 46 U.S. 1 (1847) "establish[ed] that a specification may call for a reasonable amount of experimentation to make and use a patented invention." This statement from Amgen is surprising because Chief Justice Taney's decision in Wood includes a seemingly contrary statement that bars any experimentation
Guest post by Tim Holbrook. Robert B. Yegge Endowed Distinguished Professor of Law and Provost's Professor, University of Denver Sturm College of Law.
United States patents are generally territorial. Their exclusive rights only operate within the United States and its territories. Or so one may think reading the Patent Act. Moreover, in a global marketplace, the territorial nature of intellectual property rights can create challenges. It would be simpler for a patent holder to just use the U.S. patent to cover foreign activity. This is especially true if a domestic act of infringement has spillover effects into other countries.
So, when – if ever – can a patent owner receive damages for foreign activity that may flow from acts of domestic infringement?
The UCANN vs. Pure Hemp patent case has come to a close with the Federal Circuit affirming the district court's decision to deny attorney fees to Pure Hemp. The original infringement lawsuit was filed in 2018, with UCANN suing Pure Hemp for infringing US Patent No. 9,730,911, covering various high concentration cannabis and CBD extract formulations. During the litigation, UCANN filed for bankruptcy, causing the case to be stayed, and eventually, the parties stipulated to a dismissal of the infringement claims with prejudice. However, the stipulated dismissal did not include any discussion of attorney fees -- leading to the current appeal.
Following the dismissal, Pure Hemp moved for attorney fees and sanctions, arguing that UCANN's counsel committed inequitable conduct during patent prosecution and that UCANN's litigation counsel had a conflict of interest. The district court sided with UCANN and denied attorney fees, stating (1) that Pure Hemp was not the prevailing party and (2) that Pure Hemp did not prove that the case was exceptional. The Federal Circuit has now affirmed the decision, finding that the district court did not abuse its discretion in finding the case unexceptional. Although district court the district court erred in not finding Pure Hemp to be the prevailing party, the error was harmless.
In the latest decision by the UK High Court of Justice (Patents) in Unwired Planet v. Huawei ([2017] EWHC 711 (Pat), 5 Apr. 2017], Mister Justice Colin Birss has issued a detailed and illuminating opinion regarding the assessment of royalties on standards-essential patents (SEPs) that are subject to FRAND (fair, reasonable and non-discriminatory) licensing commitments. Among the important and potentially controversial rulings in the case are:
Single Royalty: there is but a single FRAND royalty rate applicable to any given set of SEPs and circumstances,
Significance of Overstep: neither a breach of contract nor a competition claim for abuse of dominance will succeed unless a SEP holder’s offer is significantly above the true FRAND rate,
Global License: FRAND licenses for global market players are necessarily global licenses and should not be limited to a single jurisdiction, and
Soft-Edge: the “non-discrimination” (ND) prong of the FRAND commitment does not imply a “hard-edged” test in which a licensee may challenge the FRAND license that it has been granted on the basis that another similarly situated licensee has been granted a lower rate, so long as the difference does not distort competition between the two licensees.
Background
This case began in 2014 when Unwired Planet, a U.S.-based patent assertion entity, sued Google, Samsung and Huawei for infringement under six UK patents (corresponding actions were filed in Germany). Unwired Planet claimed that five of the asserted patents, which it acquired from Ericsson in 2013 as part of a portfolio comprising approximately 2000 patents, were essential to the 2G, 3G and 4G wireless telecommunications standards developed under the auspices of the European Telecommunications Standards Institute (ETSI). Because Ericsson participated in development of the standards at ETSI, any patents shown to be SEPs would necessarily be encumbered by Ericsson’s FRAND commitment to ETSI.
The UK proceedings involved numerous stages, including five scheduled “technical trials” which would determine whether each of the asserted patents was valid, infringed and essential to the ETSI standards. During these proceedings Google and Samsung settled with Unwired Planet and Ericsson (which receives a portion of the licensing and settlement revenue earned by Unwired Planet from the patents), leaving Huawei as the sole UK defendant. By April 2016 three of the technical trials had been completed, resulting in findings that two of the asserted patents were invalid and that two were both valid and essential to the standards. These findings are currently under appeal. The parties then agreed to suspend further technical trials. In October 2016 a “non-technical” trial began regarding issues of competition law, FRAND, injunction and damages. Hearings were concluded in December 2016, and the court’s opinion and judgment were issued on April 5, 2017.
A. The High Court’s Decision – Overview
The principal questions before the court were (1) the level of the FRAND royalty for Unwired Planet’s SEPs, (2) whether Unwired Planet abused a dominant position in violation of Section 102 of the Treaty for the Formation of the European Union (TFEU) by failing to adhere to the procedural requirements for FRAND negotiations outlined by the European Court of Justice (CJEU) in Huawei v. ZTE (2014), and (3) whether an injunction should issue in the case. In the below discussion, Paragraph numbers (¶) correspond to the numbered paragraphs in the High Court’s April 2017 opinion.
B. FRAND Commitments – General Observations
Justice Birss begins his opinion with some general observations and background about the standard-setting process and FRAND commitments. A few notable points emerge from this discussion.
